- Meta CEO Mark Zuckerberg recently announced that 10,000 additional layoffs are expected in the company due to the current economic climate and higher interest rates.
- He warned that the tech sector could face similar economic struggles for many years.
- The company plans to reduce its open positions, close low-priority projects, and cut multiple layers of management.
News of an additional 10,000 Meta layoffs came with a warning from CEO Mark Zuckerberg about the state of the United States economy.
Large tech companies including Meta, Amazon and Cisco have suffered from the volatile economy, leading to tens of thousands of layoffs, with more in the tech sector expected to come. Instead of temporary discomfort, Zuckerberg predicted that the sector will struggle with the economy for “many years.”
In a Year of Efficiency report sent to Meta employees on Tuesday, Zuckerberg blamed higher interest rates as the reason behind staff cuts, which are expected to trim the company by as many as 10,000 more employees, nearly doubling the 11,000 layoffs that took place last fall. Zuckerberg also said that 5,000 open positions would be closed as the company attempts to operate at a leaner capacity.
The Federal Reserve has been increasing interest rates steadily for the past year to combat inflation, and although the interest rate hikes have slowed, Zuckerberg believes the current “difficult” economy will continue for the technology sector as it has for the foreseeable future.
“At this point, I think we should prepare ourselves for the possibility that this new economic reality will continue for many years,” Zuckerberg wrote. “Higher interest rates lead to the economy running leaner, more geopolitical instability leads to more volatility, and increased regulation leads to slower growth and increased costs of innovation.
“Given this outlook, we’ll need to operate more efficiently than our previous headcount reduction to ensure success,” he added.
Zuckerberg previously stressed the importance of becoming “a leaner and more efficient company” and repeated that desire in his Year of Efficiency statement. During the COVID-19 pandemic, tech companies and e-commerce boomed, leading to outsized revenue growth that slowed as the nation navigated the pandemic, Newsweek reported in November.
Higher interest rates, increased competition in the tech sector and the general struggle of the economy have damaged companies in the tech sector as the country recovers from the pandemic.
The downturn in the economy is a new development for Meta, which Zuckerberg said saw “rapid revenue growth year after year” for most of the company’s history.”
“But last year was a humbling wake-up call. The world economy changed, competitive pressures grew, and our growth slowed considerably. We scaled back budgets, shrunk our real estate footprint, and made the difficult decision to lay off 13% of our workforce,” Zuckerberg wrote.
In addition to laying off 10,000 more employees, Meta also plans to cancel “low priority projects” and remove multiple layers of management to allow the company to “invest heavily” in the future.
Newsweek previously reported that the economic challenges in the tech sector may not forecast similar struggles for the broader labor market. Although employment growth may stall, analysts said “the economy at large remains short-staffed.”
Newsweek reached out to Meta via email for comment.